By Dr. David Kass. Originally published at ValueWalk.
On July 24, 2015, AT&T closed its $49 billion acquisition of DirecTV. Under terms of the agreement, DirecTV shareholders received $95.00 per share comprised of $28.50 per share in cash and $66.50 per share in AT&T stock. DirecTV shareholders are receiving 1.905 shares of AT&T per share of DirecTV. Since Berkshire Hathaway Inc. (NYSE:BRK.A) (NYSE:BRK.B) owned 31.4 million shares of DirecTV as of March 31, 2015, that holding converts into 59.7 million shares of AT&T valued at approximately $2 billion at AT&T’s closing price of $34.29 on July 24. In addition, Berkshire Hathaway receives approximately $900 million in cash.
In his 2012 letter to shareholders, Warren Buffett said that DirecTV was a combined purchase of Todd Combs and Ted Weschler. When this deal was announced in May, 2014, Messrs. Combs and Weschler issued a joint statement: “This is a terrific transaction for all involved: Enhanced choice for consumers, coupled with increased value for both AT&T and DirecTV shareholders – a natural.” The two portfolio managers built Berkshire’s stake in DirecTV beginning in 2011 at an average cost of about $60 per share.
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